Empowering Small Donors in Federal Elections

The breakthroughs in small donor fundraising that have occurred in presidential campaigns demonstrate the potential that exists for greatly increasing the role of small contributions in federal elections by magnifying their importance with multiple matching funds. The future of campaign finance reform must include an effort to bolster the power of small donors by amplifying their political voice. Congress can do that by adopting a small donor empowerment program for federal elections. The report is the first to show how a small donor matching fund model — used successfully in New York City, and elsewhere — could work for Congressional elections.

Adam Skaggs and Fred Wertheimer of Democracy 21 discuss how a public financing program post-Citizens United would empower small donors in the political process:

Executive Summary

Our government is broken. Partisan gridlock and armies of special interest lobbyists prevent Congress from acting to solve the serious problems facing the nation. On the issues that matter most to Americans, Congress often does nothing. And when Congress does act, it is all too often on issues that favor narrow interest groups that funnel millions of dollars to elect our representatives.

The surge of unlimited, often secretive spending in the wake of Citizens United threatens to make this situation even worse. Our money-drenched campaign finance system prevents Congress from working in the public interest. Moreover, as history has shown, unlimited and secret money in politics leads to scandal and corruption.

At the same time, recent years have seen the beginning of a far more positive trend: breakthroughs in the rise of small donors in presidential elections. Beginning a dozen years ago, and spurred on by Internet tools that make political giving easier, small donors began to play an important role in some presidential campaigns. Candidates from John McCain in 2000 and Howard Dean and John Kerry in 2004 to Ron Paul and Barack Obama in 2008 were lifted by small donors.

But even as Obama raised unprecedented amounts of small donations in 2008, he still was raising substantial amounts in large gifts from traditional sources. And Members of Congress continue to raise funds the traditional way, heavily from lobbyists and PACs.

There can be no doubt that small donors — of both major parties, of all ideologies, from all over the country — can play a new, positive role in our politics. Citizens must be engaged as an alternative source of funding to the role being played by influence-seeking donors.

The breakthroughs in small donor fundraising that have occurred in presidential campaigns demonstrate the potential that exists for greatly increasing the role of small contributions in federal elections by magnifying their importance with multiple matching funds. The future of campaign finance reform must include an effort to bolster the power of small donors by amplifying their political voice. Congress can do that by adopting a small donor empowerment program for federal elections.

A system in which small donations to federal candidates are matched with public funds at a multiple ratio would increase the importance of small donations and increase the incentive for a broader base of voters to participate in funding elections. Such a system could transform political candidates into agents of civic participation who focus on mobilizing their constituents, instead of lining up special interest fundraisers. Financial involvement in elections, even in small amounts, serves as a “gateway” to other forms of engagement in the political process — like displaying lawn signs, volunteering for campaigns, canvassing voters, and passing out campaign literature — and studies show that small donors are more likely to engage in this kind of participation.

The system would be strictly voluntary: candidates could opt to participate — and thus to be eligible for public matching funds — in exchange for agreeing to lower contribution limits, limits on the use of their personal wealth, and new reporting requirements. Other candidates could choose to forgo public funds and continue to finance their campaigns in the traditional manner.

The digital age we live in holds great promise for magnifying the role and importance of small donors. Technological breakthroughs in raising and giving small donations through the Internet and social media in combination with a system of multiple matching funds for small contributions could have a revolutionary impact in the way campaigns are financed in our country.

While the transformative power of a small donor matching program would be profound, the design of such a system is comparatively simple. The following components are derived from years of experience with, and analysis of, public funding systems — including the highly successful program developed in New York City. This proposal contemplates a small donor matching program that would be available for primary and general election campaigns, and would include the following elements as the core of a small donor empowerment program to fix federal elections:

A 5-to-1 match on in-state contributions up to $250. Donors could give larger contributions, but only the first $250 would be matched. A $100 donation would yield an additional $500 in matching funds; a $250 donation would yield an additional $1,250 in matching funds.

Reducing contribution limits by half for participating candidates. The existing limit of $2,500 per individual contributor (per election) would continue to apply to candidates who chose not to participate in the small donor matching program. For candidates who did participate, the maximum individual contribution would be reduced by 50 percent, to $1,250 per election.

A cap on public funds available per race — $2 million for a House candidate and $10 million for a Senate candidate — but no expenditure limits for candidates. Spending limits are not viable in the post Citizens United world of outside spending groups. Subject to the cap, the amount of public funds a candidate received would depend on the number of small donations the candidate raised. Even after receiving the maximum public funds, candidates would be able to raise (and spend) additional funds privately — subject to the contribution limits applicable to participating candidates.

A qualifying threshold to ensure that public funds were not disbursed to uncompetitive or marginal candidates. Before becoming eligible for public funds, House candidates would need to raise $40,000 from at least 400 donors, and Senate candidates would need to raise the same amounts times the number of congressional districts in their states. These contributions would need to be in amounts of $250 or less per donor from in-state residents.

Unlimited coordinated party expenditures in support of candidates, but only from funds the parties raised from contributions limited to no more than $1,250 per donor per year. This would strengthen the ability to respond to outside spending groups.

Effective disclosure and enforcement to ensure the program was effectively and efficiently administered, and to ensure that the program is not defrauded.

An adequate and reliable funding stream to ensure sufficient matching funds and guarantee that the program remains solvent.